Natural Gas and Refiners Weak – Closing Notes, Wednesday, October 19
Oct 19, 2016 Trading Blog
Great API number of a 3.8 million draw on Tuesday afternoon and confirmation with an EIA draw of 5.2 million this morning. The numbers sent the XLE up as much as 2% with a close of +1.5%. The OIH +2.6% outperformed the XOP +1.7%.
The XLE has crossed the entire value area from the low of 69 to the upper side of 71 so far this week. The range has been building since the late September OPEC deal announcement. Prices advertised at the top today, but the action over the last hour looked like a clear rejection of high value. Tomorrow could bring a test of the 8 day moving average around 70.25 level, which is also a low volume node on the market profile over the last 10 days. I think the market probably holds at the 8ema for a return to fair value in the 70.90 range and maybe another test of the highs around 71.35. I’ll be looking to play long off the 8 day if it sets up.
Halliburton was the big earnings report of the day. HAL surprised with a profit which led to a 4.3% gain on the day. The report pulled up SLB +2.5%, NOV +1% and BHI +2.4%. SLB will report on Thursday and that will probably be my main trader for the day.
Onshore drillers continued their run with HP +1.5%, PTEN +1.7% and NBR +.8%. Offshore drillers did even better with RIG +6%, ESV +3.9% and DO +4.8%.
Big oil was green, but not anywhere near the averages. XOM +.5%, CVX +.5% and BP +.6%. The smaller independents were where the action was today with COP +2.6%, APC +1.5% and NBL +2.3%.
Shale producers also had a big up day with EOG +2%, PXD +2.7%, DVN 2.5% and CLR +3.2%.
The only two groups that didn’t participate were the natural gas stocks and refiners. COG -2.4%, SWN -1.3%, AR -1.3%. RRC and EQT barely stayed green.
With oil prices rising, the refiners were a short trade today. VLO -1.7%, HFC -3%, MPC -.2%.
Pipelines were strong with KMI +2.6%, WMB +2.8%. PSX was weighed down by the refiners, but managed to stay on the green side with the pipelines.